You have been engaged to examine the financial statements of Fairfield for the year ended June 30 . \(20 \times 2\). You discover that all transactions were recorded in the general fund. The general fund trial balance as of June 30, 20X2 was:

Your audit disclosed the following additional information:
1. The accounts receivable and revenue include \(\$ 1,500\) due to the city's water utility for the sale of its scrap.
2. The balance in Taxes Receivable-Current Year is now considered delinquent, and the town estimates that \(\$ 24,000\) will be uncollectible.
3. On June \(30,20 \times 2\), the town retired, at face value, 6 percent general obligation serial bonds totaling \(\$ 40,000\). The bonds were issued five years ago, at face value of \(\$ 200,000\). Interest paid during the year ended June \(30,20 \times 2\), was charged to Bonds Payable.
4. During the year, supplies totaling \(\$ 128,000\) were purchased and charged to Expenditures. The town conducted a physical inventory of supplies on hand for June \(30,20 \times 2\), and this physical count disclosed that supplies totaling \(\$ 84,000\) were used. Fairfield uses the consumption method of accounting for inventories.
5. Expenditures for the year ended June \(30,20 \times 2\), included \(\$ 11,200\) applicable to purchase orders issued in the prior year. Outstanding purchase orders as of June \(30,20 \times 2\), not recorded in the accounts amounted to \(\$ 17,500\). Fairfield used the nonlapsing method.
6. On June 28, 20X2, the State Revenue Department informed the town that its share of a statecollected, locally shared tax would be \(\$ 34,000\).
7. During the year, equipment with a book value of \(\$ 7,900\) was removed from service and sold for \(\$ 4,600\). In addition, new equipment costing \(\$ 90,000\) was purchased. The transactions were recorded in General Property.
8. During the year, 100 acres of land was donated to the town for use as an industrial park. The land had a value of \(\$ 125,000\). No recording of this donation has been made.
\section*{Required}

a. Prepare a formal reclassification and adjusting journal entries for the general fund as of June 30. 20X2. Account titles should be respected if acceptable, though different.

b. Prepare closing entries for the general fund as of June 30.20X2.

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Cash Short-term Investments Accounts Receivable Taxes Receivable-Current Year Tax Anticipation Notes Payable Appropriations Control Expenditures Estimated Revenues Control Revenue General Property Bonds Payable Debit Credit $ 16.800 40.000 11,500 30.000 $ 50,000 400,000 382.000 320,000 360,000 85,400 52.000 Unreserved Fund Balance 207,700 Budgetary Fund Balance Unreserved 80,000 Total $1,017.700 $1,017.700